Pulse: RealNetworks Pulls Down Tech Sector - TheStreet

For a change of pace,

TheStreet.com's

Internet Sector Index

was not dragged down by

Yahoo!

(YHOO)

or its cyber cohorts

America Online

(AOL)

,

Amazon.com

(AMZN) - Get Report

and

eBay

(EBAY) - Get Report

, instead being brought down by

RealNetworks

(RNWK) - Get Report

,

Juniper

(JNPR) - Get Report

and

Inktomi

(INKT)

.

RealNetworks reported revenue last night that was in line with expectations, but ended the day 30% lower after disclosing some glum news about an even glummer online advertising market. Similar warnings from online ad agency

DoubleClick

(DCLK)

depressed the dot-com contingent last week.

Merrill Lynch analyst

Henry Blodget lowered his fourth-quarter estimate on the real-time media streaming company by 2% to 73 million and maintained earnings per share at 4 cents.

Blodget maintained his accumulate/buy rating, as the company is a leader in the streaming franchise. However, he noted that consumer software revenue growth slowed due to a decline in the rate of RealPlayer downloads.

Check Point Software

(CHKP) - Get Report

lent some support to the DOT after posting third-quarter earnings that exceeded analysts' expectations by 8 cents, citing stronger-than-expected demand and sales.

The Israeli network security firm earned $61.1 million, or 35 cents a diluted share, up from $24.7 million, or 15 cents a share, for the same period last year. A

First Call/Thomson Financial

survey of 20 analysts expected the company to earn 27 cents a share for the third quarter.

Quarterly revenue more than doubled to $116 million from $57.8 million a year earlier. Check Point ended the session 12% higher.

The Comp had a volatile day, but finally gave way to the red side, ending the session 1.3% lower, dragged down by

Cisco

(CSCO) - Get Report

and

Oracle

(ORCL) - Get Report

.

Nasdaq heavyweight

Sun Microsystems

(SUNW) - Get Report

bounced higher after it

inadvertently posted its earnings early, which were well above estimates, on its Web site.

2:13 p.m.: IBM Suffers Mightily but Doesn't Hurt Brethren; Intel Jumps

IBM

(IBM) - Get Report

stood for International Bummer Machines as the computer maker declined 15.6% after saying last night that third-quarter sales missed forecasts.

Software sales fell 3% because Big Blue's sales team failed to close contracts before the quarter ended, and a shortage of materials used to make chips hurt sales of some server computers, according to IBM officers.

Company officials were quick to add that revenue growth "should be stronger" in the fourth quarter and that the company expects to meet analyst estimates for earnings and revenue in the first half of 2001.

Goldman Sachs

analyst Laura Conigliaro didn't agree, cutting her rating on IBM this morning to market outperform from recommended list. Three other analysts followed suit, as

Prudential Securities

,

Deutsche Banc Alex. Brown

and

Wasserstein Perella Securities

all downgraded IBM.

Conigliaro said the company's revenue growth will slow, and profits are unlikely to beat expectations for the next two quarters. "IBM seems to be running into one issue after another, with many of these issues attributable to faulty execution," wrote Conigliaro in this morning's research note.

IBM has not been growing at the same fast clip as its competitors and has lost 11% of its value this year. Sales in the previous three quarters declined from their comparable year-earlier periods because of losses in personal computer sales and companies that put off spending on servers and services because of year 2000 concerns. The Big Blue bummer knocked the

Philadelphia Stock Exchange Computer Box Maker Index

down 2.4% and sapped more than 103 points from the

Dow Jones Industrial Average. In fact, though, it wasn't such an awful session for boxmakers aside from IBM.

Gateway

(GTW)

was up 1.2%,

Apple

(AAPL) - Get Report

was up 1.6% and

Compaq

(CPQ)

was up 3.8%.

Intel

(INTC) - Get Report

was beginning to feel the sunshine after releasing its financial results last night. The chipmaker beat its own lowered expectations for third-quarter earnings and said fourth-quarter revenues would rise 4% to 8% compared with the previous period. It was the most actively traded Nasdaq stock, up 7.1% on 94.7 million shares.

Merrill Lynch

downgraded the stock to long-term accumulate, raised its fourth-quarter earnings estimate and cut its 2001 forecast.

ABN Amro

raised its rating to outperform from hold. Intel shook off Merrill's downgrade and fed off ABN Amro's praise. Intel also gave the

Philadelphia Stock Exchange Semiconductor Index

some juice; it lately was up 2.3%.